LG Electronics, Reflection of vehicle component solutions business value...Prospect of valuation re-evaluation(KB Securities)

[Infostock Daily= Reporter An Hoe Hyun] On the 9th, KB Securities predicted that LG Electronics is at the beginning of re-evaluation of its stock price and that its stock price will increase greatly due to the reflection of its business value of vehicle component solutions in the future. Investment opinion 'Buy' and target stock price of 120,000 won were maintained.

"Starting next year, LG Electronics' Vehicle component Solutions(VS) business will drive sales and profit growth by expanding orders and turning a surplus," the company predicted, adding, "The smartphone(MC) sector is expected to reduce a significant deficit from next year due to business adjustment and production efficiency."

"The VS and MC businesses, which have served as a discount factor for LG Electronics' stock prices due to continued losses, are expected to turn into surplus and reduce deficit starting next year, and will be highlighted as factors that will break away from undervalued valuation of LG Electronics in the future," the company explained.

It is also expected to reassess the business value of Vehicle component Solutions(VS).

"LG Electronics' VS sales are estimated at 7.7 trillion won, up 40% in 2021, and 10.1 trillion won, up 31% in 2022, and are expected to generate more than 500 billion won in annual operating profit from 2022," the company predicted, adding, "Although the estimated operating profit in 2022 is similar to that of its rival Mando or Hanon System, the current stock price is likely to increase in the future as the value of the vehicle component solutions business is not reflected."

Reporter An Hoe Hyun ahh@infostock.co.kr